What makes a Million Dollar MVP?
The Minimum-Viable Product, or MVP, is a concept popularized by Eric Ries in his 2011 book Lean Startup.
While popular usage of the term has changed a bit from Eric’s original meaning, the core concept remains the same:
the MVP is the minimum level of work-product that we can test in the marketplace.
Building and launching an MVP is one of the first activities a new startup completes.
If You Build It, (Maybe) They Will Come
On its way to the marketplace, an MVP goes through three distinct stages:
- Idea: Everything from initial idea until implementation begins. Includes market research, customer discovery, and solution exploration.
- Build: The meat of the process. Technical partners take the concepts outlined during Idea and design, develop, test, and prepare them for launch.
- Launch: Once implementation is complete, the product is prepared for release and brought to the marketplace.
Many first-time founders view this initial launch as a terminal point in their process. They believe in the strength of their vision and view the implementation process as the only barrier to realizing that vision. Once built, they have zero doubts that their MVP will be a runaway success, and expect their growth
In reality, early stage startups typically experience slow initial growth, before trending sharply upward after months (or even years). This model is often referred to as “Hockey Stick Growth”.
The Holy Hockey Stick & Product-Market Fit
In the Hockey Stick model, a startup sees little to no traction in its early months or years, before hitting their
“inflection point” and trending upwards into an exponential growth curve.
In this model, a startup’s inflection point is reached once it finds “Product-Market Fit” (PMF),
what Marc Andreesen describes as “being in a good market with a product that can satisfy that market.”
Founders often overestimate their ability to identify Product-Market Fit before they’ve launched.
They assume that if they can bring their MVP to market, everything will just work out.
But amongst companies that had successfully raised fundraising,
the number one reason for failure was because there was “No Market Need” for their product.
This overconfidence leads many first-time founders to over-invest in their first launch,
spending too much time and money obsessing over their “perfect” product,
only to find that the market’s interest in that product wasn’t what they’d hoped.
When the big day comes, they hit the red button, kick their feet up, and prepare watch their valuation to climb to $1M and beyond.
But that growth never comes. After months—or even years—of work, their MVP is met with little to no market response.
In reality, it often takes startups months or even years of work to find the fabled “Product-Market Fit”.
For non-technical founders, this delay is especially problematic: the longer your startup takes to find traction, the longer you have to support that search.
Supporting a few months of development is one thing, but keeping an entire team paid for six months to a year is difficult even for the ultra-wealthy.
It’s common for founders to think that they’ll be different—that those other startups failed because they didn’t have what it takes.
But $1B+ failures like Quibi
show us that these mistakes aren’t just made by the unprepared or underfunded.
Why Big Launches Fail
In 1962, Everett Rogers published a book called Diffusion of Innovations, describing how new ideas spread across cultures and populations.
In that book, he identified 5 categories of people that each approach new ideas in different ways:
- Innovators: those who love trying new things and may even be the people encouraging others to explore a new idea.
- Early Adopters: those comfortable taking risks, but want to form a solid opinion of the new idea before they vocally support it.
- Early Majority: those interested in new ideas, but want proof of its effectiveness.
- Late Majority: those who do not like to take risks, and they tend to question the need for changes.
- Laggards: those who prefer the status quo because they know what to expect.
These different approaches to new ideas effect the way people view new products, and the kinds of products each are interested in. A product that’s interesting to an Innovator is viewed as too risky by the Early Majority. And a safe offering that might be interesting to the Late Majority is going to be completely ignored by the Innovators and Early Adopters.
New products don’t have access to the entire curve at once. They can’t, because the different parts of the curve aren’t interested in the same kinds of products.
This is why Clubhouse is where the tech hipsters chat about Artificial Intelligence and Facebook is where your Aunt Tina posts videos about chemtrails.
And it explains why Quibi failed: they invested so much that the product had to reach the mass-market to be considered a financial success, but introduced a new product category that the Early and Late Majority weren’t interested in.
Launching early and focusing on Innovators and Early Adopters allows you to target the part of the curve most likely to be accepting of your product. It gives you a chance to see immediate traction with a small but interested group of customers. Over time, as we improve our product, we gain access to larger and larger parts of the curve. This, in turn increases our rate of growth, and speeds us towards Hockey Stick Growth.
The Product Development Cycle
Finding true Product-Market Fit is a process, one that starts with launch and continues through a cycle of iterations
and improvements as our product gets closer and closer to finding fit.
But thinking of this process as a cycle isn’t enough. While many founders are familiar with this concept from “Lean Startup”, few actually practice it.
And that can mean disaster for the non-technical founder.
If 2020 showed us anything, a lot can happen in a year. For the non-technical founder to be successful, they have to keep these cycles as efficient as possible.
That doesn’t mean we have to be as cheap as possible, or move through these loops as quickly as we can. Cost is just one part of efficiency: the other part is value.
Our goal with each loop through the cycle is to produce the greatest amount of value while spending the least amount of time and money.
If we prioritize what’s most important to our customers, we can make it through each loop providing new value, getting closer to Product-Market Fit, and increasing our chances of survival long term.
Finding The True Hockey Stick
If Product-Market fit isn’t binary, what does true Hockey Stick Growth look like?
The final stage of the Hockey Stick model is characterized by “rapid” or “surging” growth. After our inflection point, our curve begins to bend sharply upward.
For a curve to get steeper over time, it has to be “accelerating”.
In math terms, that means that it’s second derivative must be positive or increasing.
That means that our growth, or the “velocity” at which our metrics change, is itself changing.
In startups, our growth rate naturally increases as we achieve Product-Market Fit.
With each successive improvement to our product and to how we sell that product, our curve gets a little bit steeper.
Over time that curve starts to look like the one above.
In reality, the inflection “point” of the Hockey Stick model is more of an inflection “process”:
with each successive launch, we improve our Product-Market Fit,
increasing our growth rate and opening up larger and larger portions of the market as we go.
The Value of Launching Early and Often
Prioritizing launch over “perfection” means reaching our first customers in weeks, not months.
That means less upfront investment, less exposure to risk, and less time waiting to show traction.
That’s time and money we can use to iterate through our inflection point,
finding early Product-Market Fit and kickstarting our Hockey Stick growth.
It’s a playbook any non-technical founder can follow.
On paper, it’s simple enough: define your MVP, find technical partners and have them prepare to build it, then build, launch, and iterate towards Product-Market Fit.
Let’s show you how that’s done.